May 4, 2016 / 9:16 AM / in 3 years

Algeria's gas exports to EU set to rise 15 percent in 2016: official

HAMA, Algiers (Reuters) - Algeria expects to increase natural gas exports to Europe by 15 percent to over 50 billion cubic meters this year, more than recovering from the drop since 2013 as output rises from existing and new fields, a top industry official said.

The North African OPEC member, the fifth-largest supplier of gas to Europe, is due to host talks with European Union officials and oil companies later this month on future gas supplies, as current contracts are due to expire in 2019-2021.

Algerian gas exports to the European Union have been increasing since the fourth quarter of 2015, with the pace stepped up this year, said Omar Maaliou, the national oil company Sonatrach’s deputy general manager in charge of marketing.

“We anticipate a 15 percent increase in our exports (to Europe) in 2016 compared to 2015,” he told Reuters.

“We already recorded significant growth in the first four months of 2016 as exports by pipeline and LNG recorded a growth of over 30 percent compared to the same period in 2015.”

Two new liquefied natural gas plants were commissioned in 2013 and 2014 in addition to the existing plants. It also uses three export pipelines, two to Spain and one to Italy.

Algeria exported over 44 billion cubic meters of gas in 2015 to Italy, Spain, France, Turkey, Portugal and Greece, the official said, down from 48 billion cubic meters in 2013 and 45 billion cubic meters in 2014.

“The decline in recent years (between 2011 and 2015) is mainly due to the international economic crisis and the overall decline in consumption of natural gas in our core markets in Europe,” Maaliou said.

“In parallel, we recorded an increase in internal consumption.”

He said that 2016 will be a year of growth in hydrocarbon production with the start of production from new fields and increased volumes from existing fields.

Four fields in the southwest and southeast are expected to come online in 2016.

Longer term, Algeria, with the world’s third-largest potential shale gas reserves, may turn to developing those non-conventional sources to sustain deliveries to the EU market, energy analysts say. But shale remains a politically sensitive subject in Algeria and even exploration is in its infancy.

Algerian government and industry officials are due to meet with their European counterparts on May 23 and 24 in Algiers to discuss how to continue cooperation on gas, renewable energy and energy efficiency.

Most of the current long-term gas export contracts between Algeria and European customers are due to start coming to an end in 2019 and 2020. While the EU is keen to diversify its sources of supplies to avoid a dependence on Russian gas, EU governments are likely to seek to renegotiate prices with Algeria in the light of current market conditions, industry analysts say.

“The contracts with Italy expire in 2020, Spain in 2021, France and Turkey in 2019, it means that we are in a negotiation phase for the renewal of contracts,” Maaliou said. “We can answer the EU demand for gas even for the long term.”

Editing by Patrick Markey, Greg Mahlich

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